Category Archives: Law and Economics
Ayotte and Badawi, ‘Loopholes in Complex Contracts’
ABSTRACT In 2016, J Crew exploited a loophole in a complex debt contract, allowing it to remove $250 million of collateral from its lenders’ reach. How could a flaw like this arise in a contract between sophisticated commercial actors? Answering this question requires a model where contracts can be imperfect and evolving. We create such […]
Yumiao Wang, ‘Rethinking the Contract-Failure Theory’
ABSTRACT The contract-failure theory posits that the nonprofit form can be an indicator of high product quality, because the nondistribution constraint reduces the nonprofit manager’s financial benefits from cheating. This would give nonprofits an advantage over for-profit firms when consumers cannot determine product quality, and thus explains nonprofits’ existence. This paper finds that nonprofits are […]
Lisa Lopez, ‘An Economic Comparison of Succession Law Systems: Prioritizing Spouses vs Forced Shares For Children and Proposal for a Standards Based Approach to Child Disinheritance’
ABSTRACT In the United States (‘US’), the foundation of succession law is the freedom of disposition. Priority is placed on the testator’s freedom to choose what happens with their property after they die. Thus, laws governing the distribution of property in both testate and intestate situations are aimed at honoring the testator’s intent. In the […]
Urs Schweizer, ‘Group causation theories and deterrence of tortious acts’
ABSTRACT This paper examines a model with multiple actors, each of whom faces a binary action choice. The action choice imposes harm on a victim that depends on the number of actors who enter or, alternatively, who deviate from a due care standard. The paper examines incentive and welfare effects from per-capita liability under simultaneous […]
Andreas Peters, ‘Is Europe Hindering Medical Innovation? Unraveling the Patent Time Trap’
ABSTRACT This study explores how patent rules and economic factors affect the development of new medical devices, like heart monitors or surgical tools, in Europe. Using advanced computer models, we found that extending patent protection by 3 years through Supplementary Protection Certificates (SPCs) can boost companies’ innovation efforts by 13.7% (with 95% confidence between 12.9% […]
Dylan Clarke, ‘An Economic Approach to Interpretation’
ABSTRACT This Essay develops an economic approach to statutory and contractual interpretation. The economic approach to interpretation understands ‘things’ as inherently economic objects that drafters intend to specify to include close-to-perfect substitutes or similar fairly priced items by the market. Several difficult cases involving exclusivity clauses, the exchange of land, and options contracts are resolved […]
Daniel Benoliel, ‘Intellectual Property Inequality Alleviation’
ABSTRACT The concept of economic inequality driven by the concentration of Intellectual Property (IP) is emerging as a novel framework for understanding economic disparities. This arises from the unique implications of IP on market structure and competitive dynamics. Traditionally, competition law has focused on preventing market power abuses that can arise from monopolies and cartels. […]
Elizabeth Emens, ‘Bound: The Imaginative Surplus of Contractual Intent’
ABSTRACT Contract law is generally understood in terms of enforcement. The legal definition of a contract is a promise that the state will enforce. Individuals are empowered by contract law to create legal arrangements that the state will step in and enforce. And yet most contracts never make it to court. This Article inverts the […]
Kenneth Khoo, ‘Reflecting on Reflective Loss’
ABSTRACT In Commonwealth jurisdictions, the reflective loss doctrine bars shareholders from recovering damages that overlap with the company’s own losses. In this article, I locate the doctrine’s theoretical foundations in liquidation protection – the rules that shield corporate assets from unilateral withdrawals, thereby facilitating capital lock-in and long-term investment. Although these rules offer clear benefits, […]
Guernsey, Serfling and Yan, ‘When Speaking Freely Pays: Anti-SLAPP Laws and Firms’ Cost of Equity’
ABSTRACT A fundamental question in corporate finance is whether a firm’s cost of equity (COE) is influenced more by the amount of information disclosed or by the direction and tone of that information. While greater transparency can reduce information asymmetry and lower financing costs, negative disclosures may increase perceived risk and, consequently, firms’ COE. We […]